The Hidden Impact of Blockchain on Society

Advancements in technology may be transformational. However we cannot forget that they also create adjunct problems.

For instance, social media addiction is a serious issue, the Internet spawned the need for instant gratification, and artificial intelligence has many of us worried about technological unemployment.

Unfortunately, blockchain is no exception. And yet, everybody wants a piece of the pie, and people are already pouring their life savings into cryptocurrency investments. Should we take a step back and reconsider?

Productivity paradox

Proponents everywhere tout that blockchain will make the world more productive. I've even made the argument that blockchain will force auditors and accountants out of glorified administrative work so they can produce more value for society.

Whether it's in banking, logistics, or advertising, on the surface, it may seem logical that any technological change will create "productivity gains." But before we convince ourselves that blockchain will be a time saver, consider the Solow Paradox.

Also known as the Productivity Paradox, this is the observation that "... as more investment is made in information technology, worker productivity may go down instead of up."

I've witnessed the Solow Paradox in action while working in different offices alongside C-Suite executives and other consultants. I've seen working professionals barely able to work an Excel spreadsheet, let alone utilize the countless Excel formulas that could have made their work output more productive and efficient.

While some will argue that the technical incompetencies I describe above are the result of poor training and weak hiring practices. Shouldn't the concern of the Solow Paradox be seriously considered if blockchain technologies are destined to have a stake in all industries?

It's certainly possible that the misunderstanding of technology may very well add hours to our workdays, rather than subtract them.

So before we get excited and confident about so-called productivity gains, due care and strategic planning should be top of mind to ensure that workers and organizations are adequately prepared for the next shift in the technological revolution.

If new technologies are thrown at workers without adequate understanding of and training on the tools at hand, this may cause further declines in productivity, elevated stress levels in the workplace (and stress leads to health problems), and ultimately risk creating even more work.

The slump in smarts

Blockchain allows for the validation of transactions through an automatically verified, tamper-resistant system. This causes many to dream of the days where middlemen (and their fees) will be gone, and when tasks like verification and audit will be obsolete. All data recorded in a blockchain will be trustworthy since transactions cannot be altered.

Sounds utopian - and yet, reliance on technology has been shown to negatively impact human performance. The Google Effect (not committing facts to memory because we know everything is on Google) is alive and rampant. In fact, recent studies show that 90% of people suffer from this digital amnesia.

So as we move toward trusting everything recorded in a blockchain, let's consider what might happen to society's ability to be healthily skeptical and to critically think for ourselves outside of a blockchain.

For instance, I still know many finance professionals who are quick to pull out the calculator function on their phones rather than crunching the numbers in their heads. Is it really because it's more convenient, or have they simply lost the ability to do the math?

While some studies show that society is at risk of become less intelligent with its increasing reliance on technology, these studies should simply be a red flag. Maintenance of brain health and increasing use of brain power is necessary as our species collectively continue to solve problems around the world.

So how do we guarantee this is the direction we are heading in with blockchain? Instead of relying on blockchain technology as the "be all end all," we could consider blockchain as a type of backup validation tool to leverage our current systems rather than a complete replacement.

To ensure our critical thinking skills remain top-notch, let's also retain the skill set to perform transactions ourselves despite technologies that can automate tasks for us (like calculators). Technology should support us, not replace us.

Shift in skill sets

I started my career in auditing so I tend to have a pretty skeptical mindset. Whenever I read a metric or statistic, I'm quick to validate the source. Transactions within a blockchain network inherently create trust, but I think the automated "trustworthiness" of these transactions will negatively impact social skills and human behavior.

How? We were taught to be skeptical about certain things growing up (e.g. always count your change), and depending on where you lived, you were probably taught early to trust certain organizations like the bank and the government. Now as adults, we inherently trust that our technology is reliable (when was the last time your phone alarm let you down?).

My concern is the impact of a future blockchain-driven trust economy on social cues. Will people still trust transactions outside of a blockchain network? Will blockchain become the primary validation method of all data? Will society become more or less trusting in general? Will a transaction or agreement made outside of a blockchain be legitimate?

If we do eventually rely on blockchain to validate and manage tasks and transactions, I foresee the decline of underrated skill sets and important social behaviors. With the loss of middlemen (think brokers, agencies, auditors), our mediary, negotiation, and project management skills might also deteriorate. With this in mind, now is a crucial time to start planning for this and figure out ways to mitigate it.

After all, we know from experience that new technologies dissolve existing problems, but will also create new ones in passing. Let's prepare accordingly this time.